back to article HMRC opens consultation to crack down on off-payroll working in private sector

The UK government has opened its long-awaited (and dreaded) consultation (PDF) on proposals to extend IR35 off-payroll working in the private sector, which could affect 2 million contractors. In the Autumn Budget 2017, the government revealed it would consult on how to tackle non-compliance with the off-payroll working rules …

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  1. David 135

    Contractors aren't hit hard enough, let's add a dividend tax. Contractors aren't hit hard enough, lets hit them harder with dividend tax. Contractors aren't hit hard enough, let's largely eliminate their ability to use a National Insurance rebate. Contractors aren't hit hard enough, let's largely eliminate the ability to use Flat-Rate VAT. Contractors aren't hit hard enough, let's try to push more of them inside IR35 and leave them without the protections of employment but with at least as high taxation (if not higher as they'll have ended up paying the employer's NI as well).

    At some point you'd hope the government will realise that it's been bashing the same group year in year out and it might actually be fairer to target a different group for a change. Or that it costs businesses who end up paying higher contract rates. Or it blurs the lines between permanent and temporary staff until companies will hire people as 'permanent employees' instead but just the role after 6-18 months and leave employees with less job security than ever before.

    Instead, it looks like contractors are the pantomime villains in the government's eyes and any increase in tax on them will be painted as a Robin Hood-style redistribution from the rich to the poor while simultaneously reducing wealth (rather than income) taxes.

    1. ChrisB 2

      David 135 - can I plagiarise and slightly adapt this for public consumption?

      1. This post has been deleted by its author

      2. David 135

        Sure

        ChrisB - sure. I keep hoping that at some point the government will realise that a measured, balanced approach to taxation that recognises economic realities is the way to go. Until then, call out where the thinking is wrong as best you can.

    2. Anonymous Coward
      Anonymous Coward

      Zero trust?

      I'm assuming, HMRC just don't trust anyone. So if they have as many possibly ways to tax you, even the biggest scrooge will be unable to avoid paying all of it.

      But the tighter you grip, and all that.

      1. Doctor Syntax Silver badge

        Re: Zero trust?

        "I'm assuming, HMRC just don't trust anyone."

        It's mutual.

  2. JimmyPage
    FAIL

    Epic fail, surely ?

    Maybe it comes from working with numbers so long, or maybe it comes from not being as fucking brain dead as the combination of our elected and unelected overlords clearly are.

    But surely, just from an efficiency point of view, it makes more sense to focus your resources on the minimum number of variables that returns the maximum reward ?

    So rather than pissing around with plans to try and extract a bit more from 2 million people, it would be a better idea to see if you could raise the same from fewer ... starting with Google, Facebook, Vodafone, Apple, Amazon, Starbucks and the like ?

    I've long stopped seeing incompetence as a conspiracy. That said, sometimes I still find myself marvelling at the unerring ability of governments to come up with almost the worst possible solution.

    Come the revolution, I suggest we rewrite the rules to specifically prevent government departments from suggesting their own solutions. How many more employees are HMRC hoping this wheeze will buy them ? In fact, I will go out on a limb, and suggest that when HRMC were tasked with providing a "solution", they simply ordered the spreadsheet by budget descending, and then set that column width to zero when presenting their "findings". (And if they didn't then they are even more incompetent than I was giving them credit for.)

    1. Dr Dan Holdsworth

      Re: Epic fail, surely ?

      Government tax policy has always aimed to maximise complexity and minimise simplicity. A good example here would be alcoholic drinks. Taxing booze is surely a fairly simple thing to do; you'd not think that a government could complicate that.

      A simple booze tax would be a set amount per ml of ethanol in anything intended for human consumption. Simple, easy and effective in raising money.

      Not like the fifteen different rates of tax for different and finely-shaded sorts of alcoholic drink which exist at present, then?

      Tobacco is another silly one. Cut tobacco for smoking attracts a tax, whole uncut leaf tobacco doesn't, and HMRC are seemingly uninterested in collecting the tax even if directly asked if they'd like to be sent the money.

      This gargantuan complexity persists throughout the tax code. Simplifying the tax code drastically would be a very good thing, especially as once simplified HMRC might understand it.

    2. Tom Paine Silver badge

      Re: Epic fail, surely ?

      So rather than pissing around with plans to try and extract a bit more from 2 million people, it would be a better idea to see if

      False dichotomy.

      Next!

    3. Anonymous Coward
      Anonymous Coward

      Re: Epic fail, surely ?

      or how about asking Bernie to pay his fair share?

      (F1's Ecclestone avoided potential £1.2bn tax bill)

      http://www.bbc.co.uk/news/uk-27144637

  3. Anonymous Coward
    Anonymous Coward

    Well I’m not working like an employee am I, or I wouldn’t have a 1 week notice period would I?! Or pay for all my own expenses, insurance, training, travel expenses...

    1. mearnsgeek

      ... or have to hire an accountant, or have to jump through hoops to get a mortgage, or pay double for every holiday you take because you're not earning. Yeah, it sucks.

  4. Anonymous Coward
    Anonymous Coward

    Has anyone set themselves up as an LLP ( Limited Liability Partnership ) rather than a Limited company ?

    As LLPs were created for the benefit of lawyers and accountancy/management consultants I'm wondering if they provide advantages to other groups - certainly HMRC seem to prefer to leave them alone.

    Which is odd since there are now tens of thousands of LLPs in the UK, with the vast majority having very obscure ownership and money flows.

    1. grizzlybaz

      I do. I used to operate through a limited company but would it up and moved to an LLP model with a business partner. Probably the reason HMRC leave them alone is that they get a reasonable tax take. Each partner takes their share of profits as defined in the partnership agreement then pays income tax and NI through the self assessment, as if you are a self employed sole trader. I do pay a bit more tax overall now but it's a hell of a lot simpler to manage. You are still subject to company law, so we still have to submit accounts to Companies House but it's the best of both worlds in my view.

  5. Anonymous Coward
    Anonymous Coward

    Did they manage to get any contracting consultants for this consultation?

    1. Anonymous Coward
      Joke

      Here is your missing icon ->

      I assume the AC for a reason? Did you personally sit in on the consultations?

  6. BitCoward

    Is that all?

    So, about a quarter of a Vodafone - perhaps all the IR35 contractors could arrange to have gone to the same school as the Head of HMRC...

  7. amanfromMars 1 Silver badge

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  8. Anonymous Coward
    Anonymous Coward

    I swapped

    A client offered me a permanent role. I decided to take it. Taken the cut and additional tax on the chin. Actually loving it and I'm back to enjoying doing my job without the stress. My only worry was the management BS that I would have been exposed to. Resolved that issue by being a lowly engineer with no responsibilities but with a consultant engineer pay rate. Win win. Even got a 2.5% pay rise after my 1st 6 months. I do miss the unlimited holidays though; but do enjoy being paid when I am on holiday.

    1. Anonymous Coward
      Anonymous Coward

      Re: I swapped

      And in taking the role, you have admitted that your contract role was one of disguised employment... So you are liable for the tax and ni etc of your contracting day with that client...

      Foot, aim, fire!

      1. Mark 65

        Re: I swapped

        Hardly. They could have been dedicated to a single project piece and the company witnessed the merits of their skills and competence and figured "it would be good if they were solely ours". Don't just jump straight to the (seemingly envious) conclusion you wish to be true.

      2. Mike 137 Silver badge

        Foot, aim, fire!

        It should be noted that shooting oneself in the foot was originally not an accident but intentional - it was a self-inflicted injury in order to escape the trenches in 1914-18.

  9. Nematode

    Jeezo am I glad I'm retired now and no longer have to be concerned about IR35. My commiserations to those who still need to worry. It's time the entire contractor workforce adopted what we used to call on the PCG boards (RIP) the "Nuclear Option". I get caught, you get hit for holiday pay etc etc. HMRC are just wilfully blind when it comes to the fact that a Contractor and a Staffie sittign next to each other migh tbe doing the same "tasks" but they sure as hell aren't doing the same "job". One can be let go at a moment's notice, has no holiday or sick pay (especially sick pay, as I know to my loss - 14 months out of work), the other has to have his/her employer go through hoops of Employment Law before they can consider sacking them. Shurely it's time that Employment and Tax Law were unified. Shurely it's against one "Human Rights" to be taxed as one but not employed as the other or v/v

  10. Only me!
    Meh

    Sides of a coin

    I am a contractor, as such as undertake project work....when completed I hand over to a business as usual team and leave (Thanking my luck stars I am out of there). My contract is to implement, there is no permanent role for what I do, I therefore fall outside IR35. (I know there are many other boxes o tick, but I am trying to keep it simple). When the client, as they often do, try and tell me how to do what I do, I ask them what experience they have and why do they need, if they know how to do it better than me.....on a couple of times I have walked on that basis. To be fair most of the time they understand I offer something at a cost that they do not require long term...I do the complex stuff and hand over a system that an employee can then look after.

    I know A LOT of people that claimed they were contractors but were "Filling" permanent roles. i.e. If they were not there a full time employee would be.....now that is inside IR35....if they need to pay more to get a temp person in with the skills they need then the employer should pay the premium and treat the person in the permanent role like an employee when they are there!

    Simples in my book.....I have no problem working in the public sector on that basis....I have even worked on contracts they wanted inside IR35 until I asked, some very direct and simple questions, at which point they moved it to outside IR35.

  11. Anonymous Coward
    Anonymous Coward

    I'm not really sure if I should be concerned or not...

    I'm a freelance contractor for one single company, and until recently I was working just a few hours a week, not troubling the taxman very much at all. However, I'm apparently a bit good, because a few months back I suddenly got 37.5 hours a week, which is what I would generally call 'a full time job'. All of this from the comfort of my own home I hasten to add. Just no holidays, no employee protection, no acknowledgement from management I'm not still a freelance minion...

    As I'm registered as a sole trader, my only concern is basic tax and NI payments, which would not normally be a huge concern. But as I am NOT a limited company, I am unclear on exactly what COULD happen, if things were looked into in more detail.

    Anon because well...

  12. Velv
    Facepalm

    Who is conducting the consultation on behalf of HMRC (because as a one off task, it’s the sort of thing departments get a large Management Consultancy to undertake)?

    Who has the most to benefit from a reduction in the small limited company worker market by placing their own people in the flexible worker space?

    No conflict of interest there then... #sarcasm

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  13. LucreLout Silver badge

    Reduce taxes

    If taxes were lower, people wouldn't avoid them. The laffer curve in action. Since we're at the peak already, either the government learn to live within their means and existing income, or the only option is to reduce taxes (and so spending) to try to stimulate the economy to grow. Taking more tax at this position on the curve is counter productive.

    I already avoid income taxes, not by being a contractor, but by taking a pay cut and reducing my hours. I dropped between 10 - 20 hours a week, but only lost 1/8th of the money in my pocket. I'm just not willing to work more for the government to take half of everything I earn - why should I? If I'm going to put in 100% of the effort, why would I want just 50% of the gains? (Its less when you consider the impact of TFE withdrawal making the effective tax rate as high as 65%).

    If I'm going to start working any further hours then it'll have to be as a contractor to reduce my tax payments. No matter which party gets elected, I'm not paying any more than I already am. Sorry.

  14. Anonymous Coward
    Anonymous Coward

    Here's a novel idea: make large corporates pay their fair share of tax, instead of letting them get away with buying Hector lunch. The ROI will be much better.

  15. Anonymous Coward
    Anonymous Coward

    It’s an interesting one.

    I’m a contractor and so far I’ve been careful to ensure that my engagements are outside of IR35 with the usual substitution clauses, place of work being my home address etc etc etc.. as well as making sure that the work I am doing is ‘Value Add’ and not just ‘BAU’.

    But.. whilst I am not an employee of the client, I am an employee of my Limited Company - so I can understand why HMRC may get the hump as that ‘Protection’ that us contractors say we don’t have is something that we *should* be getting from our Limited Companies, we just choose not to as it benefits us financially…

    So if they want to change the rules, sadly, there isn't much we should be able to complain about.

    AC as I'm awaiting the down votes!

    1. Anonymous Coward
      Anonymous Coward

      ... whilst I am not an employee of the client, I am an employee of my Limited Company ...

      No you aren't, you are a director of your own ltd. company.

      A company director is not an employee and is not subject to various requirements for employees (holiday pay, sick pay, pension, etc.)

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